Consider the following information about an IPO underwriting transaction.The net proceeds to the issuing firm are $141.75 million.The public offering price is $50 per share.The spread is $2.75 per share.Two million shares are sold.How many shares are issued in this IPO?
A)3,500,000
B)3,000,000
C)2,500,000
D)2,000,000

Question

Quizplus · Accepted Answer

The number of shares issued is equal to the net proceeds divided by the public offering price minus the spread. In this case, the number of shares issued is $141.75 million / ($50 - $2.75) = 3,000,000 shares.

Consider the Following Information About an IPO Underwriting Transaction